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Britain to attack 'tax havens'
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Financial crisis has highlighted potential problems in overseas territories and crown dependencies, says Chancellor Darling.
In his pre-Budget speech yesterday, Chancellor Alistair Darling has made it clear that offshore financial centres, which allow for lower taxes, are to be attacked. It follows the aims of US President-elect Barack Obama to eliminate what they describe as 'tax havens', by which they mean tax avoidance or tax evasion.
The question of Britain's overseas territories, which includes Gibraltar, and of crown dependencies, which includes the Isle of Man and the Channel Islands, are mentioned in the pre-Budget speech in the context of the current financial crisis.
In his speech, Darling said that "financial markets affect everyone?s daily life. If they fail to function properly, the impact is felt right across our economy and by every one of us.
"So restoring and maintaining financial stability is absolutely crucial.
"The causes of instability are global, so the Government?s response must mean working closely with other countries.
"Earlier this month, the Prime Minister and I attended the G20 summit in Washington.
"A comprehensive range of measures was agreed to increase transparency of financial activities, ensure better international supervision and prevent excessive risk taking.
"It is crucial this plan is implemented. So with the UK holding the presidency of the G20 next year, we will take the lead in doing all we can to prevent a reoccurrence of these problems.
"Building on the work of the Financial Stability Forum, which for some time, has been looking at international agreement on capital requirements that reflect the economic cycle and risk.
"Domestically, too, we need to make supervision and regulation more effective.
"The Financial Services Authority is now considering changes across the regulatory system ? including banks? capital requirements, liquidity conditions, accounting rules and pay structures.
"The new chairman of the FSA will also examine whether the right processes are in place to ensure the FSA can supervise the system.
"The current financial crisis has also illustrated two further issues.
In this contect, he added: "First, the recent financial turbulence has highlighted potential problems with overseas territories and crown dependencies, such as the Isle of Man and Channel Islands.
"They attract banking customers with lower taxes ? without contributing to the UK Exchequer.
"But at times of stress, depositors need to know who will compensate them.
"The British taxpayer, cannot be expected to be the guarantor of last resort.
"So I have asked for a review of these regulatory arrangements, which will report to me in the spring.
"Second, we must resolve the situation highlighted by the Icelandic bank ? Landsbanki ? where billions of pounds of British savers? money can be deposited in a foreign bank with branches in the UK ? with insufficient safeguards for these depositors.
"They were not adequately covered by the compensation scheme of the Icelandic authorities, so we had to step in to guarantee UK savers' money.
"So we are taking the lead, at the European Union, to tackle these shortcomings in international compensation arrangements.
"We can?t allow this to continue and we have asked the European Commission to come back with recommendations by the spring."
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